Smartphone functionality doesn’t change much although this year AI, both embedded and standalone, has enhanced a number of smartphone functions.  Smartphone brands are always looking for new features to push those with older phones to upgrade to the latest model but rarely do those features actually mean much.  More cameras and bigger cameras has been a focus for smartphone designers over the last few years but there was a limit to how many cameras are needed for average picture taking and that feature set has begun to fade.  As noted ,AI is the new darling of the smartphone space but seems to be having trouble generating enough value that consumers would be willing to pay extra for it, and that is the goal of any new mobile feature.
There is one feature that has been gaining attention.  One that has actually been around since 2011 but was not in a position to be accepted by consumers at that time.  That feature is a second smartphone display.  Brands have been experimenting with these additional displays, typically on the back of the phone for years but until the advent of foldable phones they were considered novelties with little attraction for consumers.  Now that smartphone buyers are more familiar with secondary screens and the controlling software has become more sophisticated, these additional displays have become more popular.

Xiaomi (1810.HK) has been researching the concept and recently released the Mi 17 smartphones series, including the 17 Pro and the 17 Pro Max, both having secondary displays.  The 17 series (the Xiaomi 17 has only one screen) has been extremely popular already selling (1 week) 20% more than the previous generation (no dual screen) at this point in time.  Sales of the phones in the first 5 minutes of release set a new record and the phones (1 week) have already sold 1 million units, also a record.  This has given Xiaomi the confidence to state that the next series (Xiaomi 18 line) will also have dual screens and that the company is adding to its R&D budget, above the $140m US it has already spent, to research more dual screen functions and Xiaomi expects to release live translation to the 17 series by the end of this month and will add new features each month going forward.  

​As with many smartphone features there is a need for competitors to tag along as rivals add new features, and while some brands have been burned by dual screen failures in the past, we expect others will follow.  Logically the secondary displays will get larger in the same way other features have, and we see the ultimate end point being a smartphone with displays covering both the back and front, essentially an all-display phone.  We believe this would be overkill and a distinct cost burden, although currently 6.8” flexible OLED displays can be had for less than $20 in quantity.  It is not out of the realm of possibility.

While VR devices languish, AR glasses seem to have become the focus of those looking to capitalize on a “VR Lite” world that can provide additional visual functionality without the massive headgear that keeps VR out of the mainstream.  That said, even lower on the VR/AR scale are the latest category of ‘glasses’, AI glasses.  AI glasses are just what they seem to be, relatively standard glasses with the ability to connect to an AI system that can be used for a number of functions.  They tend to be inexpensive relative to AR and VR devices, with functionality varying with each new device.
The category is ruled by Meta’s (FB) Ray-Ban glasses that were released in October 2023.  They have sold over 2 million units since and are the standard against which competitors are marked or mark themselves.  Yet, when CE brands see unit volumes in the millions it is hard to resist sticking a bunch of engineers into a facility somewhere and seeing what they come up with in a few months.  While Meta basks in the glory of being the best by far in a ‘new’ category, the competition is beginning to come from other substantial players, with China’s Xiaomi (1810.HK) the latest to release its own branded AI glasses.  We note that while AI glasses are a standalone category today, we expect the category to merge with AR glasses at some point in the near future as consumers will see AI glasses as the ‘low-end’ of the visual headset spectrum, with AR being the mid-tier and VR being the upper tier.
Given the success of the Meta Ray-Ban’s Xiaomi did not stray far from both the Ray-Ban look and functionality, and we already get the feel that while AI glasses are reasonably inexpensive, it’s going to be a knock-down, drag-out battle on price once the basics are established.  Just like the smartphone world, where a new feature or application can sustain a line for a year or two,  AI glasses and eventually AR glasses will be one and the same, although at a lower price point, and for AI glasses that become available under $300 (currently) and eventually under $200, it is easy to see how volumes can become attractive to CE brands that deal in millions of units regularly.

As can be seen in the images above, there is very little physical difference between the Xiaomi Ai glasses and the Meta Ray-bans, and when it gets down to components that similarity remains.  Here is a comparison of the feature sets of both.  These are for the basic models of each.

So, what can these glasses do, considering they are only a bit more expensive than the average pair of glasses at a discount retailer (avg. ~$184).?

• Translation - They have the ability to translate conversation in real time, with the number of languages available dependent on the model or brand.  The Xiaomi glasses include 10 languages including Chinese.
• Text recognition – AIs have made text recognition a much easier task then having to run documents through a physical OCR or digital documents through software to break down image-based text into actual editable text.  AI systems can do this easily using the camera that is built-in.
• Object Recognition – Object recognition requires either a massive database and a matching system, or a model that has been trained on large amounts of image and video data.  Again, using the camera, one can have the AI examine an object that the user is looking at and classify or describe it.  Taking it further, in theory, the user can then ask the AI about the object, such as where it might be sold and in what colors.
• Voice commands and Assistants – Multiple microphones allow voice commands to be used to initiate processes or systems, such as video recording.  This allows the user to initiate the command without having a free hand.
• QR Codes – The glasses can scan mobile QR codes for payments , avoiding having to take out your phone to scan QRs.
• Transcription – The glasses are able to record meetings, conferences, and  conversations and create transcripts and translations.
• Video and Image Capture – Using the embedded camera, the user can capture images and video (30 fps), take video calls, or livestream.
• Audio – The glasses have a 5 microphone array that can be used for voice calls and built-in open-ear speakers in the frames so no earbuds are necessary.
• Integration – This is where things can get a bit more difficult as applications need to be able to interact with the OS and, potentially, applications on a smartphone.  , so things like livestreaming might be limited to only those live streaming applications that have APIs or other necessary interfaces to work with the glass’s hardware.  This is where proprietary systems can cause AI glasses users to become frustrated and be unable to use all of the features.  However, as glasses become more popular the interface issue should fade as both applications and hardware modules become more standardized.

One question that comes to mind at this relatively early product stage is whether the direction will be whether brands will take the route of maintaining a price range in the $200- $400 range and compete by adding features or will the direction be to keep hardware costs low and keep reducing the price to attract more users?  We expect the former.

​In our 05/02/22 note we indicated that despite Xiaomi (1810. HK) being the best-selling smartphone on the subcontinent only a month before, the government of India decided to freeze the company’s assets, continuing an investigation that accused the company of transferring large amounts of capital out of the country under the guise of 'royalty payments’ that violated Indian statutes.  The government alleged that since 2015 Xiaomi had been using this method to move what was alleged to be over $680m, with the implication that company employees had given misleading information to local banks in order to exact the transactions.
It seems that Xiaomi’s appeal fell on deaf ears as the Appeals Court agreed with the earlier decision and confirmed the legality of the seizure of $682m in Xiaomi assets, of which ~84% is said to be royalty payment to be made to Qualcomm (QCOM), with both companies supporting each other in that they agree that a legal agreement to license Qualcomm’s IP was the ultimate end for the capital transferred, with Xiaomi adding, “We will continue to use all means to protect the reputation and interests of the company and our stakeholders,” although it is going to be a difficult task considering India has also accused and fined a number of other Chinese smartphone brands over violations said to have been made in recent years.
Under the more obvious alleged violations, there has been considerable bad vlood between China and India over border conflicts that began in 2020 when conflicts over a road being built by Indian workers was said to cross into disputed land between the two countries.  Since then India has been closely watching for incursions by Chinese military, and has taken a very aggressive stance toward Chinese smartphone brands, we believe partly as a  a public face toward Chinese aggression, but also as a way to lessen the dominance that Chinese smartphone brands have in India, in order to give Indian brands a helping hand.  While whether the allegations against Xiaomi, Oppo (pvt) and other Chinese smartphone brands are legitimate or not, the conflict does not help India’s programs to encourage display and semiconductor companies to build actual production facilities on the sub-continent, especially given the history of the Indian government’s incentive programs, which have come and gone a number of times as administrations changed.  Not quite biting the hand that feeds you, but maybe nipping at the fingers…

Xiaomi (1810.HK) opened potential customers to a crowdfunding source that will allow them to purchase the company’s Mijia AR glasses at a discount for a limited amount of time.  The headset, which was announced on July 31 of this year, will be available for pre-order for ~$370, a discount of 7.3%, from the $400 suggested retail price.  The device is a standalone system that is based on a single Sony (SNE) micro-OLED micro-display (pixel density of 3,281 PPI) that can generate 3,000 nits, although typically 1,800 nits and weighs ~100 g. (~3.53 oz.).  It runs on an 8 core CPU with a Qualcomm (QCOM) chipset and has 3GB of memory and 32GB of storage capacity, with  a 1020 mAh battery that is expected to last between 100 minutes and 3 hours and takes about a half hour to charge.  There is a 50mp wide-angle camera and a 8mp periscope camera with native pass through.
According to what we have seen and read, this device is less an AR device and more a mobile camera, essentially a wearable camera and Xiaomi seems to be promoting it as such, with additional applications such as Chinese to English  translation and one-click sharing and exporting of images to the Xiaomi smartphone app.  The design of the glasses does not seem to be oriented toward the sleek design approach we would expect from Apple (AAPL) or Samsung (005930.KS), but more of a ‘proud to be a nerd’ approach that might not help to create a broad customer base.  While one would expect Xiaomi to fund the development and production of such a device, the product is crowd-sourced and will begin production when it has raised sufficient capital to justify manufacturing (to be done by Seiko (6286.JP)), which is expected to be only available in China, at least for now.  A bit on the disappointing side.

India is the 2nd largest market for smartphones and hosts assembly and component manufacturing for Samsung (005930.KS), Apple, Xiaomi (1810.HK), Vivo (pvt), Oppo (pvt), and others, but the country does not have any capability for producing LCD or OLED displays themselves.  The Indian government has sponsored various incentive programs over the last few years to attract producers to produce displays locally but most panel manufacturers are wary of building a new fab without the specialized infrastructure needed to support such an endeavor.  Such display complexes in Taiwan, South Korea, Japan and China are built around component supplier manufacturers, some of which are situated adjacent to the display facility to reduce transportation issues, and while India does have a plentiful supply of workers for assembly and similar processes, the country lacks both the supporting infrastructure (including reliable power and water) and the skilled talent to operate and maintain display fabs.
Display projects are expensive ($3b to $b typically for OLED) and require considerable government support both logistically and financially, to become a reality, and we have seen a number of display projects in China come and go over the last decade because of a lack of management and operating expertise, even with the support of the government, so when we read that a company with no experience in the display industry is ‘looking to sign an MOU with one Indian state within the next few weeks’ concerning such a project.  The company is Rajesh Exports (RJEX.IN), a Bangalore based company that is, according to the company, the largest processor of gold globally and the world’s lowest cost gold jewelers producer.  The company, also investing in the EV market (no experience there either), is looking to take advantage of the Indian government’s semiconductor incentives through a subsidiary Elest (pvt) in order to gain access to the potential financial funding, but will also fund through ‘internal accruals’, along with private equity infusions after the first year, with the project taking between 6 and 7 years.
So far there are 5 companies who have applied to access the government funding, committing a total of $20.5b, with one company having signed an agreement under the semiconductor and display portion of the incentives, ISMC Digital Fab (pvt) based in Mumbai, for a $3b plant, while other participants continue to look for deals with Indian state governments.  There is no doubt that India is a growing market for CE products and one that can support considerable assembly and board level production, but we are less sure that display projects are currently a viable alternative to China, Taiwan, Korea, or Japan, especially as the need for expertise in OLED displays manufacturing continues to grow.  Not saying it can’t happen, but most of the major display manufacturers have passed on the idea, which leaves the territory open to others, regardless of their experience.  Even with considerable government funding we give such display projects a relatively low chance of success and remind investors that Foxconn (2354.TT), the world’s largest assembler of CE products and the largest assembler in India, still has a mostly empty campus in Wisconsin that was going to be the first LCD fab in the US…still waiting on that one.

​Xiaomi’s (1810.HK) Redmi 9 Power was the top selling smartphone in India in 2021 and the brand was the best-selling smartphone brand in India based on unit volume (Apple has the highest revenue in 4Q) and was for most of 2020.  That said, there has been considerable friction between the Indian government and Chinese smartphone brands, a result of border disputes between the two countries that have created an adversarial relationship.  India’s anti-money laundering agency recently took over bank accounts held by Xiaomi Technology India, under the Foreign Exchange Management Act and has initiated an investigation of what Xiaomi called royalty payments that were transferred from India to the company’s Chinese parent in February.  The Indian government stated that “such huge amounts in the name of royalties to three foreign based entities when Xiaomi India had not availed any services from the three foreign entities…” which they believe violates the country’s foreign exchange statutes.
According the India’s release Xiaomi has been making such payments to these foreign entities since 2015, totaling $726m, which is the amount the Indian government has seized and is also considering that Xiaomi gave misleading information to the banks involved in the transfers and has called a number of former and current Ziomi employees to testify to the committee.  Xiaomi stated that it abides by all Indian laws and was fully compliant with all regulations, and is cooperating with authorities. 

​Mediatek (2454.TT) the 2nd largest company in Taiwan (market cap) and the largest producer of 4G and 5G chipsets (units) is preparing to list its Bluetooth chip subsidiary Dafa/Airoha (pvt) and is making the applications for listing on the TSE Emerging Market board, which is a prerequisite for listing on the TSE.  The company is expected to apply for full listing on the TSE after the necessary 6 months on the Emerging Market board, with its performance setting the tone for pricing on the TSE.  The listing is targeted toward attracting engineers and workers in the semiconductor space to Dafa, as competition from other semiconductor companies in Taiwan for talent has become quite fierce.  As bonuses are roughly evenly divided across all divisions at Mediatek, regardless of performance, the idea of an independent public company takes ‘sharing’ out of the bonus mix and opens the potential for higher rewards for performance.
Dafa provides Bluetooth devices to Sony (SNE), Apple (AAPL), Xiaomi (1810.HK) and JBL (pvt[1]) among others and a 10% stake in the company was sold to a group of VCs for NT$650/share, which was the largest semiconductor deal in the Taiwan VC world over the last few years.  Given 145m shares, the valuation for that transaction would be ~$3.3b US.  The Emerging Market listing is expected in May or June.


[1] JBL is owned by Harman International, who is owned by Samsung.

​Display technology continues to improve, adding a diverse cadre of technology types and ever more sophisticated techniques for delivering the best possible image for the lowest price.  That said, there are certainly times when new technology does not always have a practical application, at least for consumers.  One such development is transparency, or the ability to create an image that does not block what is behind the screen it is displayed on.  There are certainly uses for such displays, particularly HUDs (Heads-Up-Displays), which are beginning to appear in automotive applications, in digital signage, where they are the most useful, providing images and information without blocking product or store real estate, and in AR (Augmented Reality), where images are superimposed on a transparent glass or plastic lens.  Some transparent-like systems are not truly transparent in that they project an image on a transparent optical member or in front of your eye using mirrors, but what we are speaking about here are transparent displays, ones that generate images using LCD or OLED technology but have a transparent rather than a solid (black) backplane.
The degree of transparency is a key factor in determining the effectiveness of such displays, with transparent LCD displays having considerably lower transparency than those using OLED technology.  As OLED is a self-emissive technology, it requires no backlight and can therefore contain less material that would block light passing through the display.  Transparency between 35% and 40% is not unusual for transparent OLED displays while transparent LCD displays, because of the backlight, have lower transparency metrics.  There are other important factors in evaluating transparent displays, such as the accuracy of color, viewing angle, and brightness, but these are common to almost any display, with transparency making some of them a bit more important.
Given that LG Display (LPL) is the sole producer of mass produced large panel OLED displays, the company has produced a number of transparent models that are used primarily in signage applications, however, the South Korean trade press is citing an alleged proposal LG Display has made to its parent LG Electronics (066570.KS) to launch a retail oriented transparent OLED TV.  The proposal is said to be based on a fixed 55” transparent OLED display to be released next year, with a few modifications to the ones used in commercial applications (Figure 2), such as a strengthened glass cover.  That said, we find it a bit difficult to pinpoint residential applications where constant transparency would be useful.  Perhaps in the kitchen while watching a recipe video and monitoring kids playing near-by, but its difficult for us to come up with applications on a residential level that would benefit from transparent TV technology.
Xiaomi (1810.HK) released a 55” transparent OLED TV in 2020, with the display produced by LG Display, which sold for $7,200 but while generating considerable excitement among electronics influencers, sold very few units and not surprisingly so.  We are not surprised that LG Display is pursuing such a device in order to further fill its large panel OLED fabs and justify the expense of past transparency R&D, but we would be surprised if LG Electronics would take on such a project as the end market would be rather small.  We are sure there are other residential applications that we have not thought of that LG marketing will tick off in their proposal, but as a mass market device, we would rather see the time spent on other developments.

Small panel OLED demand increased display shipments in 3Q by 26.6% (16.5% y/y), with flexible OLED displays driving almost all of the q/q shipment growth.  The biggest increase from the demand side came from Apple (AAPL), who more than doubled its small panel flexible OLED panel purchases in 3Q in preparation for the iPhone 13 rollout, and Samsung Electronics (005930.KS) whose purchases were up 50% q/q.  Chinese brand small panel flexible OLED purchases were mixed, with Huawei (pvt) and Oppo (pvt) declining, and Xiaomi (1810.HK), Vivo (pvt), and Honor (pvt) increasing, albeit at much lower volumes, as shown in Fig. 1 – 3[1].
On the supply side Samsung Display (pvt) saw a 101% q/q increase (+15.7% y/y)  in flexible panels shipped in 3Q while LG Display (LPL) saw a 43.0% increase q/q (+68.5% y/y) as they fed the Apple iPhone supply chain, while BOE (200725.CH) saw an 8.1% q/q increase (+58.4% y/y).  BOE has recently celebrated its official entry into Apple’s iPhone OLED display supply chain, which will likely lead to improving shipments in 4Q.  Samsung Display’s share of the small panel flexible OLED market returned to 62.2%, a more normalized level, after a weak 2Q (47.6% share), although down from last year’s 3Q share of 70.0%, and the combined South Korean suppliers garnered 74.8% of the small panel flexible OLED panel production market, with the remaining 25.2% belonging to combined Chinese small panel flexible OLED suppliers.  When looking at both the rigid and flexible small panel composite, Samsung Display holds a 71.5% share with Chinese suppliers at 21.0% vs. 17.0% in 3Q last year.
On an overall basis, small panel OLED production continues to grow despite weak overall smartphone sales as the overall share of small panel OLED continues to grow across the smartphone market, reaching over 50% in 3Q based on our composite small panel OLED shipment data and our composite smartphone shipment data.  This year the number of mobile devices other than smartphones that are using OLED displays continues to grow, particularly notebooks, and while this will not have a significant impact on unit volume, it will continue to increment area shipments, which set the tone for capacity expansion plans.  There are few OLED suppliers that are not expanding capacity, and while much of these plans are for IT based OLED products, we expect the small panel and large panel OLED markets to become more converged as Gen 6 OLED fabs, usually used for small panel OLED production, are still efficient up to 32” panel sizes, making them viable for many IT products which might be considered ‘large panel’.  All in, OLED growth continues based on share growth in more mature applications and to early stage penetration in new mobile device markets.


[1] Note:  Figs. 1 -3 are all drawn to the same scale to show the lower proportion of rigid OLED displays compared to flexible OLED displays.

​Xiaomi (1810.HK) is an exceptional company, growing rapidly over the last few years to become the 2nd largest smartphone brand last quarter.  That is not an easy thing to do against the marketing power of Samsung and Apple (AAPL), but the company developed a very savvy on-line marketing program that essentially started the concept of ‘spot’ sales that drew significant attention to a product that would normally have been low on the list of consumers.  The company now has a very diverse smartphone line and a number of other CE oriented products, but has just expanded their TV line to include three new OLED versions that have set the price bar a bit lower than most are used to.  The obvious objective is to stimulate OLED TV sales and broaden the Xiaomi TV appeal to those who want what would be a higher quality set, but in typical fashion, Xiaomi has used low prices to attract attention rather than competing directly with other OLED brands for the premium buyer.
The sets are still expensive in Xiaomi terms, but are considerably lower priced than those produced by LG Display, Sony (SNE) and others.  Without going into a detailed comparison of the features, mostly because all of the data is not yet available, the company’s 55” OLED model will sell for $771 (US) which compares to ~$1,300 for a Sony or LG model, most of which are last year’s models.  The 65” Xiaomi OLED set will sell for ~$1,80 as compared to ~$1,800 similar sets from LG, and the Xiaomi 77” model will sell for ~$2,625 against prices between  $2,800 and $3,300 for similar sets from others.
Again we note that these are price comparisons and don’t relate to feature sets and model characteristics, but we note that the only supplier of OLED TV displays is LG Display, so the panel price for Xiaomi and competitors would be the same or more depending on the quantity.  If somehow Xiaomi is getting OLED TV panels from a Chinese supplier (not likely), the cost would likely be much higher given that LG Display’s yield, after years of production, would likely be far higher than a new producer.
Will Xiaomi’s entry into the OLED market begin to make the technology more popular in China?  Perhaps, but Chinese consumers have been lukewarm toward the technology to date, likely because of a lack of local brands, but Xiaomi could help to give OLED TV a bit more momentum on the Mainland with such aggressive pricing.  That said, the company has yet to revel whether these TVs will be released outside of China, and if so, at what price, so we expect relatively little impact on OLED TV brand share over the next year, but Chinese brands have a particular focus on share and a company like Xiaomi can withstand some losses in the OLED TV segment against it profitable mobile business and that could sustain such prices for some time.  If Xiaomi OLED TVs stay local, the impact would be light, but that’s just what was thought of their smartphones years ago….